HRS § 231-7 — Audits, investigations, hearings, and subpoenas


§231-7 Audits, investigations, hearings,
and subpoenas. (a) The director of taxation,
and any representative of the director duly authorized by the director, may
conduct any civil audit or criminal investigation, investigation, or hearing,
relating to any tax, assessment, or collection of any delinquent tax, including
any audit or investigation into the financial resources of any delinquent
taxpayer or the collectability of any delinquent tax.
(b) The director of taxation or other person
conducting hearings may administer oaths and take testimony under oath relating
to the matter of audit, investigation, or hearing.
(c) The director of
taxation or representative of the director duly authorized by the director,
when conducting a civil audit, investigation, or hearing may subpoena witnesses
and require the production of books, papers, documents, other designated objects,
or any other record however maintained, including those electronically stored,
that are relevant or material to the civil audit, investigation, or hearing;
provided that the director of taxation or deputy director of taxation shall
give written approval for the issuance of a subpoena only after a review of the
appropriateness of the issuance. A subpoena issued under this subsection:
(1) Shall state that the subpoena is issued by the
department and shall command each person to whom it is directed to attend and
give testimony at the time and place specified, and may also command the person
to whom the subpoena is directed to produce books, papers, documents, or other
objects specifically designated;
(2) May be served at any
place within or without the State by an investigator appointed pursuant to
section 231-4.3, or by any representative of the director duly authorized by
the director;
(3) Shall require attendance of the person only in
the county wherein the person is served with the subpoena or at any other place
as is agreed upon by the person and the department; provided that if the
subpoena is served in a county other than that in which the person resides, is
employed, or transacts the person's business in person, the department shall
bear the person's expenses for travel to and attendance at the place named in
the subpoena to the same extent as provided by the rules of court other than the
expenses of the taxpayer or the taxpayer's witnesses, officers, directors,
agents, or employees; and
(4) Shall contain a short, plain statement of the
person's rights and the procedure for enforcing and contesting the subpoena.
If any person
disobeys any process or, having appeared in obedience thereto, refuses to
answer pertinent questions put to the person by the director or other person
conducting the civil audit, investigation, or hearing, or to produce any books,
papers, documents, objects, or records pursuant thereto, the director may apply
to the circuit court of the circuit wherein the civil audit, investigation, or
hearing is being conducted, or to any judge of the court, setting forth the
disobedience to process or refusal to answer, and the court or judge shall cite
the person to appear before the court or judge to answer the questions or to
produce the books, papers, documents, objects, or records; provided that the
court, upon a motion promptly made by the person, may quash or modify the
subpoena if compliance would be unreasonable or oppressive or would violate any
privilege the person would be entitled to exercise in a court proceeding. If
the person fails or refuses to produce the subpoenaed books, papers, documents,
objects, or record, the court shall institute a contempt proceeding against the
person, at which time the court shall determine whether good cause is shown for
the failure to obey the subpoena or the refusal to testify; provided that the
court, on a motion promptly made, may quash or modify the subpoena if
compliance would be unreasonable or oppressive or would violate any privilege
the person would be entitled to exercise in a court proceeding. In the event
that no good cause is shown, the court does not quash or modify the subpoena,
and the person fails or refuses to comply with the subpoena, then the court
shall commit the person to jail until the person testifies, but not for a
longer period than sixty days. Notwithstanding the serving of the term of
commitment by any person, the director may proceed in all respects as if the
witness had not previously been called upon to testify. Witnesses (other than
the taxpayer or the taxpayer's officers, directors, agents, and employees)
shall be allowed their fees and mileage as authorized in cases in the circuit
courts, to be paid on vouchers of the department of taxation, from any moneys
available for the expenses of the department.
(d)
Subject to the privileges applicable to any witness in this State, the director of taxation or any representative of the
director duly authorized by the director, when conducting a criminal
investigation, may subpoena witnesses, examine witnesses under oath, and
require the production of any books, papers, documents, other designated
objects, or any other record however maintained, including those electronically
stored, that are relevant or material to the investigation; provided that the
director of taxation or deputy director of taxation shall give written approval
for the issuance of a subpoena only after a review of the appropriateness of
the issuance. A subpoena issued under this subsection:
(1) Shall state that the subpoena is issued by the
department and shall command each person to whom it is directed to attend and
give testimony at the time and place specified, and may command the person to
whom it is directed to produce books, papers, documents, or other objects
specifically designated;
(2) May be served at any place within or without the
State by an investigator appointed pursuant to section 231-4.3, or by any duly
authorized law enforcement official with the powers of a police officer;
(3) Shall require attendance of the person only in
the county wherein the person is served with the subpoena or at any other place
agreed upon by the person and the department; provided that if the subpoena is
served in a county other than that in which the person resides, is employed, or
transacts the person's business in person, the department shall bear the
person's expenses for travel to and attendance at the place named in the
subpoena to the same extent as provided by the rules of court; and
(4) Shall contain a short, plain statement of the
person's rights and the procedure for enforcing and contesting the subpoena.
Upon application by the
director, a circuit court of the county wherein the person resides or is found
may compel obedience to the subpoena; provided that the court, on a motion
promptly made, may quash or modify the subpoena if compliance would be unreasonable
or oppressive or would violate any privilege the witness may be entitled to
exercise in a court proceeding.
(e) Any subpoena issued under this section
that does not identify the person with respect to whose liability, audit, or
investigation the subpoena is issued may be served on the intended recipient
only after a court proceeding in which the director or another person
establishes that:
(1) The subpoena relates to the liability, audit, or
investigation of a particular person or ascertainable group or class of
persons;
(2) There is a reasonable basis for believing that
the person or group or class of persons may fail or may have failed to comply
with any provision of title 14; and
(3) The information sought to be obtained from the
examination of records or testimony and the identity of the person or persons
with respect to whose liability the subpoena is issued is not readily available
from other sources.
(f) The department shall pay to a financial
institution that is served a subpoena issued under this section a fee for
reimbursement of the institution's costs as are necessary and that have been
directly incurred by or on behalf of the institution in searching for,
reproducing, or transporting books, papers, documents, or other objects
designated in the subpoena. Reimbursement shall be paid at the rate of $15 per
hour for research and 50 cents per page for reproduction.
(g) A person or entity that is compelled to
testify or produce documents, information, or other items by a subpoena issued
pursuant to an audit, investigation, or hearing pertaining to another person or
entity shall not be liable for damages arising from compliance with the
subpoena.
(h) The provisions of this section are in
addition to all other provisions of law, and apply to any tax within the
jurisdiction of the department.